HONGKONG AND SHANGHAI

BANKING CORP., LTD. STAFF

RETIREMENT PLAN, (now HSBC
Retirement Trust Fund, Inc.)
Petitioner,

- versus -

G.R. No. 178610

Present:
CARPIO, J., Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

SPOUSES BIENVENIDO AND EDITHA

Promulgated:
BROQUEZA,
November 17, 2010
Respondents.
x-------------------------------------------------- x

DECISION
CARPIO, J.:
G.R. No. 178610 is a petition for review[1] assailing the Decision[2] promulgated on 30
March 2006 by the Court of Appeals (CA) in CA-G.R. SP No. 62685. The appellate court
granted the petition filed by Fe Gerong (Gerong) and Spouses Bienvenido and Editha Broqueza
(spouses Broqueza) and dismissed the consolidated complaints filed by Hongkong and
Shanghai Banking Corporation, Ltd. - Staff Retirement Plan (HSBCL-SRP) for recovery of sum
of money. The appellate court reversed and set aside the Decision[3] of Branch 139 of the
Regional Trial Court of Makati City (RTC) in Civil Case No. 00-787 dated 11 December 2000,
as well as its Order[4] dated 5 September 2000. The RTCs decision affirmed the
Decision[5] dated 28 December 1999 of Branch 61 of the Metropolitan Trial Court (MeTC) of
Makati City in Civil Case No. 52400 for Recovery of a Sum of Money.
The Facts
The appellate court narrated the facts as follows:
Petitioners Gerong and [Editha] Broqueza (defendants below) are employees
of Hongkong and Shanghai Banking Corporation (HSBC). They are also members of
respondent Hongkong Shanghai Banking Corporation, Ltd. Staff Retirement Plan
(HSBCL-SRP, plaintiff below). The HSBCL-SRP is a retirement plan established by
HSBC through its Board of Trustees for the benefit of the employees.

On October 1, 1990, petitioner [Editha] Broqueza obtained a car loan in the

amount of Php175,000.00. On December 12, 1991, she again applied and was granted
an appliance loan in the amount of Php24,000.00. On the other hand, petitioner
Gerong applied and was granted an emergency loan in the amount of Php35,780.00 on
June 2, 1993. These loans are paid through automatic salary deduction.
Meanwhile [in 1993], a labor dispute arose between HSBC and its
employees. Majority of HSBCs employees were terminated, among whom are
petitioners Editha Broqueza and Fe Gerong. The employees then filed an illegal
dismissal case before the National Labor Relations Commission (NLRC) against
HSBC. The legality or illegality of such termination is now pending before this
appellate Court in CA G.R. CV No. 56797, entitled Hongkong Shanghai Banking
Corp. Employees Union, et al. vs. National Labor Relations Commission, et al.
Because of their dismissal, petitioners were not able to pay the monthly
amortizations of their respective loans. Thus, respondent HSBCL-SRP considered the
accounts of petitioners delinquent. Demands to pay the respective obligations were
made upon petitioners, but they failed to pay.[6]

HSBCL-SRP, acting through its Board of Trustees and represented by Alejandro L.

Custodio, filed Civil Case No. 52400 against the spouses Broqueza on 31 July 1996. On 19
September 1996, HSBCL-SRP filed Civil Case No. 52911 against Gerong. Both suits were
civil actions for recovery and collection of sums of money.
The Metropolitan Trial Courts Ruling
On 28 December 1999, the MeTC promulgated its Decision[7] in favor of HSBCLSRP. The MeTC ruled that the nature of HSBCL-SRPs demands for payment is civil and has
no connection to the ongoing labor dispute. Gerong and Editha Broquezas termination from
employment resulted in the loss of continued benefits under their retirement plans. Thus, the
loans secured by their future retirement benefits to which they are no longer entitled are reduced
to unsecured and pure civil obligations. As unsecured and pure obligations, the loans are
immediately demandable.
The dispositive portion of the MeTCs decision reads:
WHEREFORE, premises considered and in view of the foregoing, the Court
finds that the plaintiff was able to prove by a preponderance of evidence the existence
and immediate demandability of the defendants loan obligations as judgment is
hereby rendered in favor of the plaintiff and against the defendants in both cases,
ordering the latter:

1.
In Civil Case No. 52400, to pay the amount of Php116,740.00 at six
percent interest per annum from the time of demand and in Civil Case No. 52911, to
pay the amount of Php25,344.12 at six percent per annum from the time of the filing
of these cases, until the amount is fully paid;
2.

To pay the amount of Php20,000.00 each as reasonable attorneys fees;

3.

Cost of suit.

SO ORDERED.[8]

Gerong and the spouses Broqueza filed a joint appeal of the MeTCs decision before the
RTC. Gerongs case was docketed Civil Case No. 00-786, while the spouses Broquezas case
was docketed as Civil Case No. 00-787.
The Regional Trial Courts Ruling
The RTC initially denied the joint appeal because of the belated filing of Gerong and the
spouses Broquezas memorandum. The RTC later reconsidered the order of denial and resolved
the issues in the interest of justice.
On 11 December 2000, the RTC affirmed the MeTCs decision in toto.[9]
The RTC ruled that Gerong and Editha Broquezas termination from employment
disqualified them from availing of benefits under their retirement plans. As a consequence,
there is no longer any security for the loans. HSBCL-SRP has a legal right to demand
immediate settlement of the unpaid balance because of Gerong and Editha Broquezas
continued default in payment and their failure to provide new security for their
loans. Moreover, the absence of a period within which to pay the loan allows HSBCL-SRP to
demand immediate payment. The loan obligations are considered pure obligations, the
fulfillment of which are demandable at once.
Gerong and the spouses Broqueza then filed a Petition for Review under Rule 42 before
the CA.
The Ruling of the Court of Appeals
On 30 March 2006, the CA rendered its Decision[10] which reversed the 11 December
2000 Decision of the RTC. The CA ruled that the HSBCL-SRPs complaints for recovery of

sum of money against Gerong and the spouses Broqueza are premature as the loan obligations
have not yet matured. Thus, no cause of action accrued in favor of HSBCL-SRP. The
dispositive portion of the appellate courts Decision reads as follows:
WHEREFORE, the assailed Decision of the RTC is REVERSED and SET
ASIDE. A new one is hereby rendered DISMISSING the consolidated complaints for
recovery of sum of money.
SO ORDERED.[11]

HSBCL-SRP filed a motion for reconsideration which the CA denied for lack of merit in
its Resolution[12] promulgated on 19 June 2007.
On 6 August 2007, HSBCL-SRP filed a manifestation withdrawing the petition against
Gerong because she already settled her obligations. In a Resolution[13] of this Court dated 10
September 2007, this Court treated the manifestation as a motion to withdraw the petition
against Gerong, granted the motion, and considered the case against Gerong closed and
terminated.
Issues
HSBCL-SRP enumerated the following grounds to support its Petition:
I.
The Court of Appeals has decided a question of substance in a way not in
accord with law and applicable decisions of this Honorable Court; and
II.
The Court of Appeals has departed from the accepted and usual course of
judicial proceedings in reversing the decision of the Regional Trial Court and the
Metropolitan Trial Court.[14]

The Courts Ruling

The petition is meritorious. We agree with the rulings of the MeTC and the RTC.
The Promissory Notes uniformly provide:
PROMISSORY NOTE
P_____

Makati, M.M. ____ 19__

FOR VALUE RECEIVED, I/WE _____ jointly and severally promise to pay
to THE HSBC RETIREMENT PLAN (hereinafter called the PLAN) at its office in
the Municipality of Makati, Metro Manila, on or before until fully paid the sum of
PESOS ___ (P___) Philippine Currency without discount, with interest from date
hereof at the rate of Six per cent (6%) per annum, payable monthly.
I/WE agree that the PLAN may, upon written notice, increase the interest rate
stipulated in this note at any time depending on prevailing conditions.
I/WE hereby expressly consent to any extensions or renewals hereof for a
portion or whole of the principal without notice to the other(s), and in such a case our
liability shall remain joint and several.
In case collection is made by or through an attorney, I/WE jointly and
severally agree to pay ten percent (10%) of the amount due on this note (but in no
case less than P200.00) as and for attorneys fees in addition to expenses and costs of
suit.
In case of judicial execution, I/WE hereby jointly and severally waive our
rights under the provisions of Rule 39, Section 12 of the Rules of Court. [15]

In ruling for HSBCL-SRP, we apply the first paragraph of Article 1179 of the Civil Code:
Art. 1179. Every obligation whose performance does not depend upon a
future or uncertain event, or upon a past event unknown to the parties, is demandable
at once.
x x x. (Emphasis supplied.)

We affirm the findings of the MeTC and the RTC that there is no date of payment
indicated in the Promissory Notes. The RTC is correct in ruling that since the Promissory Notes
do not contain a period, HSBCL-SRP has the right to demand immediate payment. Article
1179 of the Civil Code applies. The spouses Broquezas obligation to pay HSBCL-SRP is a
pure obligation. The fact that HSBCL-SRP was content with the prior monthly check-off from
Editha Broquezas salary is of no moment. Once Editha Broqueza defaulted in her monthly
payment, HSBCL-SRP made a demand to enforce a pure obligation.
In their Answer, the spouses Broqueza admitted that prior to Editha Broquezas dismissal
from HSBC in December 1993, she religiously paid the loan amortizations, which HSBC
collected through payroll check-off.[16] A definite amount is paid to HSBCL-SRP on a
specific date. Editha Broqueza authorized HSBCL-SRP to make deductions from her payroll
until her loans are fully paid. Editha Broqueza, however, defaulted in her monthly loan

payment due to her dismissal. Despite the spouses Broquezas protestations, the payroll
deduction is merely a convenient mode of payment and not the sole source of payment for the
loans. HSBCL-SRP never agreed that the loans will be paid only through salary
deductions. Neither did HSBCL-SRP agree that if Editha Broqueza ceases to be an employee
of HSBC, her obligation to pay the loans will be suspended. HSBCL-SRP can immediately
demand payment of the loans at anytime because the obligation to pay has no
period. Moreover, the spouses Broqueza have already incurred in default in paying the monthly
installments.
Finally, the enforcement of a loan agreement involves debtor-creditor relations founded
on contract and does not in any way concern employee relations. As such it should be
enforced through a separate civil action in the regular courts and not before the Labor
Arbiter.[17]
WHEREFORE, we GRANT the petition. The Decision of the Court of Appeals in CAG.R. SP No. 62685 promulgated on 30 March 2006 is REVERSED and SET ASIDE. The
decision of Branch 139 of the Regional Trial Court of Makati City in Civil Case No. 00-787, as
well as the decision of Branch 61 of the Metropolitan Trial Court of Makati City in Civil Case
No. 52400 against the spouses Bienvenido and Editha Broqueza, are AFFIRMED. Costs
against respondents.
SO ORDERED.